Treasury Secretary W. Michael Blumenthal predicted yesterday that as "normalization" proceeds in relations between the United States and the People's Republic of China, "The growth in trade will be fairly rapid."
Blumenthal told reporters at a breakfast session that he will make a projected trip to China early next year "as the senior Cabinet member on economic affairs," and that his mission will be to set up a broad framework for expanded economic relationships, including trade, commercial and financial arrangements.
He will open specific discussions on two of the most important obstacles to resumption of full trade relations. The first is the touchy question of claims by private U.S. citizens whose assets were seized by China after PRC assets were "frozen" by the United States when the Communist regime came to power in 19509
A second major potential roadblock to normalization is the failure of the United States to accord China most facvored nation (MFN) tariff treatment for its exports to this country.
Other problems remain to be solved before full "normalization" can take place, including China's lack of a system for protecting foreign patent rights.
Blumenthal's optimistic prediction that U.S. China trade will expand quickly contrasted with the cautious view of some observers that the large commitments already made to Japanese and European industrial firms might limit China's ability to finance an additional large volume of U.S. trade.
But Blumenthal's assessment tallies with that of Christopher Phillips, president of the National Council for U.S. China Trade, although Phillips acknowledges that other countries that already have normal relations with China have gotten a jump on their American competitors.
The National Council, formed in 1973, until now has been the only link in facilitating trade between the U.S. and the PRC, and is expected to continue to play an important role for some time during the normalization process.
Although Blumenthal did not offer figures to go with his optimistic assessment, Phillips said in an interview that the two-way U.S. China trade, estimated at betwwen $1 to $1.2 billion in 1978, might increase by slightly more than 50 percent next year to a range of $1.6 to $2.0 billion.
With normal diplomatic and commercial relations, Phillips said he thinks that the 1978 volume might well double by 1981. If the claims as sets, MFN and other issues are settled, Phillips thinks there are no supper limits to the U.S. China trade possibilities.
Government officers believe that the claims assets issue, which was resolved in principle in April 1973, can be settled speedily during Blumenthal's visit to China, which now is set for late February or early March.
Here is what is at stake: The U.S. in 1950 froze $76.5 million worth of PRC assets here, while China seized $196.5 million of assets of U.S. corporations and private citizens, according to the tally of the Foreign Claims Settlement Commission of the United States.
Until U.S. claims are resolved, any PRC asset in the U.S. might be attached by U.S. claimants. That has ruled out direct banking relations, trade exhibitions or calls by Chinese flag vessels at U.S. ports. In export transactions, financing has to be handled throught third country banks.
Lawyers and other experts on Chinese affairs suggest that if banks holding the assets frozen in the U.S. pay some accumulated interest, there will be enough money to liquidate the U.S. claims at about 50 cents to the dollar, which probably would be acceptable to the anti-Communist bloc in Congress.
The MFN issue is trickier. Because Chinese exports, like those of most other Socialist states, do not enjoy MFN treatment, tariffs on their goods shipped here are up to 300 percent higher than for nations accorded MFN treatment. In addition, the Trade Act of 1974, incorporating the Jackson-Vanik amendment, prohibits negotia- tion of an MFN agreement with any country that inereres with the right of its citizens to emigrate.
This amendemnt was intended to put leverage on the Soviet Union to allow Jews to emigrate. But the language applies to China as well and, so far, in dealings with the National Coucil, China has balked at complicance.
But inside and outside the U.S. government, experts feel that the momentum on both sides for new trade relations is so strong that some way of solving this and other problems will be solved.
Blumenthal said that his visit "will not be a sight seeing trip." He will spend most of his time in Peking, with a side trip to Shanghai-where he was brought up as a German refugee. He plans to fly from China to Tokyo before returning to the U.S., where he will discuss not only the status of U.S. China affairs, but have preliminary talks with the new Japanese prime minister, Masayoshi Ohira, on the heads of state economic summit meeting planned for Tokyo in mid 1979.